Excess inventory example

Excess inventory is often confusing since it is a dynamic quantity with an equally dynamic Euro value. This spreadsheet is a reasonably simple example that demonstrates the complexity. Let's take Cap 1 and use the following scenario.

 Assume that HansaMatrix needs 2,000 capacitors of a certain value. In order to get the lowest cost, HansaMatrix purchases a reel of 4,000 capacitors. (HansaMatrix makes this investment and the customer is not charged for any excess investment until the project is terminated.) After building the first run of 400 boards, we have an excess of 2,000 capacitors that are only used to build your boards.

After building the second run of 400 boards, the excess capacitors have dropped to zero; but, in order to build the third run, we must buy a new reel of 4,000 capacitors; and we start the cycle all over again. Take that scenario and multiply it by the number of components on your printed circuit board, and you can see that we are talking about a complex situation with a constantly varying Euro value.